SRI RAJ KUMAR KHATRI V. ASST. COMMISSIONER IMCOME TAX CENTRAL CIRCLE 3 KANPUR CITY

IAPL/118/2008

AI Insights

This case revolves around an appeal by Sri Raj Kumar Khatri against a penalty imposed by the Assistant Commissioner of Income Tax, Central Circle 3, Kanpur, for furnishing inaccurate particulars of income for the assessment year 1993-94. The primary legal contention was whether the penalty order was barred by limitation under Section 275 of the Income Tax Act, 1961. The tribunal had earlier reduced the penalty but did not address the limitation issue as raised by the assessee. The High Court examined the applicability of Section 275, particularly focusing on the circumstances under which the limitation period for imposing penalties can be extended. The court concluded that the department's interpretation, which considered the date of receipt of the tribunal's order by a subsequently assigned officer as the starting point for limitation, was incorrect.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 670515 (HC-KANPUR)
• Appeal Type: Others
• Pronouncement Date: 05-07-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MANU GHILDYAL; PIYUSH AGARWAL
• Assessee Lawyers: RAHUL AGARWAL
• Keywords: Assessment Year; Inaccurate particulars of income; Limitation; Penalty order
• Section: 271(1)(c); 275; 260-A

Judgement Text

"Court No. - 35 Case :- INCOME TAX APPEAL No. - 118 of 2008 Appellant :- Sri Raj Kumar Khatri Respondent :- Asst. Commissioner Imcome Tax Central Circle 3 Kanpur City Counsel for Appellant :- S.S.C. I.T.,Rahul Agarwal Counsel for Respondent :- C.S.C.,Manu Ghildyal,Piyush Agarwal Hon'ble Bharati Sapru,J. Hon'ble Ajay Bhanot,J. Heard Shri Rahul Agrawal, learned counsel for the appellant and Shri Manu Ghildyal, learned counsel for the department. This appeal under Section 260-A of the Income Tax, 1961(hereinafter referred to as the 'Act') has been filed by the assessee against the order of the Tribunal dated 08.02.2008 for the Assessment Year 1993-94. The appeal is admitted on the following substantial question of law:- \"C. Whether the penalty order dated 14.03.2006 is barred by limitation?\" The facts of the case are not in dispute at all and there is only issue of limitation. The facts are that the A.C.I.T, CC-III Kanpur issued a notice on 13.12.2005 under Section 271(1) (c) of the Act and while dealing with the matter came to the conclusion that the assessee had furnished inaccurate particulars of income of Rs.5,07,232/- in assessment year 1993-94 and by order dated 14.03.2006 imposed a maximum penalty of Rs.6 lakhs. Aggrieved by the order of the penalty, the assessee filed an appeal before the CIT (Appeals). The CIT (Appeals) by the impugned order restricted the penalty to Rs.5 lakhs. The assessee filed an appeal against the order of CIT (Appeals) and raised an additional issue in appeal that the penalty order passed under Section 271(1)(c) is barred by limitation under Section 275 of the Act and thereby the penalty order be quashed. Learned counsel for the appellant has sought to argue that three situations are envisaged under Section 275 of the Act whereby the limitation can be extended. Section 275 of the Act reads as hereunder:- \"275. 1 Bar of limitation for imposing penalties (1) 2 ] No order imposing a penalty under this Chapter shall be passed- (a) 3 in a case where the relevant assessment or other order is the subject- matter of an appeal to the Deputy Commissioner (Appeals) or the Commissioner (Appeals) under section 246 or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of 4 the Deputy Commissioner (Appeals) or] the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later; (b) in a case where the relevant assessment or other order is the subject- matter of revision under section 263, after the expiry of six months from the end of the month in which such order of revision is passed; (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.]\" In the three situations mentioned above none of the situations include the situation which has arisen in the present case i.e. limitation have been expired on account of the fact that the case was transferred from one officer to another officer. It has been recorded categorically in para 20 of the Tribunal's order that without there being any dispute on facts that the order dated 07.12.2004 of the I.T.A.T was received on 05.10.2005 by the C.I.T. (Central) who was having jurisdiction over the assessee. Infact the order dated 07.12.2004 of the I.T.A.T was received by the C.I.T., Kanpur on 27.04.2005, but before the passing of order by I.T.A.T, the jurisdiction of the assessee was transferred to C.I.T (Central), Kanpur, who received the order of the Tribunal on 05.10.2005 and, therefore, it was the contention of the department that the period of limitation was to be calculated from 05.10.2005, the date on which the C.I.T. (Central), who had assumed jurisdiction later, had received the order. However, after having heard the learned counsel for both the sides and having perused the provisions by which the limitation can be extended, this Court finds that such a situation where the case was transferred to another officer is not included in the situations where limitation can be extended. No explanation has been given by the Tribunal as to how it has applied the provision of Section 275 of the Act to the present case. Upon examination we also find that the three situations envisaged in Section 275 of the Act clearly do not cover the situation in the present case. We, therefore, come to the conclusion that limitation had been indeed expired and the penalty order had not been passed within the period of limitation. The question of law is, therefore, answered in favour of the assessee and against the department. The appeal is accordingly allowed. Order Date :- 5.7.2018 pks "